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Woes Caused By Markets, Not Environmentalists

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The Tampa Tribune

Published: May 2, 2008

In a generally ignorant anti-environmentalist screed, your guest columnist, Colin Flaherty, blames environmentalists for problems that are really caused by markets.

His explanation of the housing crisis is that environmental restrictions have prevented homes from being built. But the current "housing crisis" is precisely that we've built too many homes. For the past seven years, developers have been cranking out new houses faster than the population has been rising. Surprise! Housing prices have started falling. That's how supply and demand works. This becomes a financial crisis only because banks and investment houses have over-invested in mortgage derivatives, even after the housing market turned downward in 2006. That's their own bad judgment. Flaherty's argument makes no sense.

High gas prices because environmentalists have stopped oil companies from drilling? Well, no. The current run-up in oil prices has happened even though world oil production is at an all time high and the U.S. has had above average inventories of both oil and gasoline. The problem with gasoline is that demand for it is inelastic. Huge price increases have only a small effect on demand. In fact, prices have nearly tripled since 2000, with no drop in gasoline use. Except for the political consequences, there is no reason that oil companies couldn't raise the price of gasoline until "demand destruction" hurts their bottom line. That's probably in the $10- to $12-per-gallon range.

Why can't consumers cut back on gasoline use? It isn't because we're "addicted to oil." There just aren't alternatives to the automobile because there has been only token investment in public transit.

Not enough nuclear reactors for Flaherty? Well, nuclear energy is pretty much a socialist enterprise. Reactors are massively expensive and take a long time to build. There is the problem of security and locating waste disposal sites. (I suggest next door to Flaherty's house.) Utilities can't get financing and insurance for new reactors. Nuclear power works best in countries like France where it is completely a government undertaking. Even though the U.S. government is dangling more and more handouts to utilities, the "nuclear renaissance," if it happens at all, is far in the future.

Flaherty blames environmentalist support for the "eco-scam" of corn based ethanol. But environmentalist publications have been warning for years that it takes nearly as much energy to make ethanol from corn as you get from burning it. The agribusiness lobby is driving the ethanol train.

As for food shortages: A failure of the Kansas wheat crop has forced the U.S. to import wheat for the first time ever. A multi-year drought in Australia (global warming, anyone?) has lead to the loss of 60 percent of its wheat crop and its entire rice crop, bringing exports to a halt. Other countries that normally export grain have stopped, fearing shortages at home. That, plus high fuel prices, plus allocation of cropland to biofuels, plus speculation in the commodities markets, have led to a run-up in food prices.

Anyone who read the IPCC or the National Academy of Sciences reports on global warming has known for years that food shortages were a near term possibility.

Unfortunately, Mr. Flaherty is a better writer than I, in that he can generate more distortions that I can refute in an equivalent space. So, I'll stop and wish him luck on his ski trip. Every year since 1998 has been among the 25 hottest years on record. And the three hottest years ever were 2005, 2006 and 2007. So snow might be getting pretty scarce soon.

Ecophobe Flaherty should stay alert. That changing environment might just get him.

Dallas Dunlap

Brooksville

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